Long-term demand is key factor in pork

Hogs: Right now, our focus is not on the moderate decline in prices that may be seen over the next week or so. Instead, we are busy covering this bigger issue demand story. Let’s break down the consumption story of pork. China has always been the largest demand sector in the world. In 2012, China will be even bigger than all others combined. We wonder if USDA has numbers correct here. Total China demand for 2012 will increase 3.5%. USDA’s estimate for pork exports suggests no change in US pork to China though. Will China be able to supply their increase in demand?…Rich Nelson

Cattle: This week we discuss our price outlook process. A bit more time was spent on the first step, making production estimates, than we expected. Much of the time was spent on our future placement forecasts. As we see it, feedlots will offer packers 2.5% fewer head than 2011. Total slaughter, from feedlot steers and heifers and cows and bulls, will decline 2.4%. Because we are placing cattle at lower weights, we will have smaller finishing weights. That lowers total beef production to 3.8% smaller than 2011. Compared to 2011, the shortfall in production will happen later in the year than we previously forecast. By quarter…Q1 +0.3%, Q2 -4.3%, Q3 -6.7%, and Q4 -4.5%. Next up, we discuss export and import estimates to see how much is left for the U.S. consumer (the true measure of supply)...Rich Nelson

Rich Nelson is Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.

About the Author
Rich Nelson

Rich Nelson is Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com.

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